Category Archives: Trade

Sanctions bind Russia’s energy elite to Putin | Reuters

Far from dividing those closest to President Vladimir Putin, they have forced the main players in the energy sector to rally behind him. This circle has by necessity become more focused, Western and Russian businessmen, diplomats and politicians said.

“They are defiant,” said a senior Western businessman who has access to some of the business and political leaders targeted by sanctions. He asked not to be identified because of the political sensitivity of the subject.

“The sanctions have brought consolidation and have made his inner circle only more dependent on him.”

The influence of more liberal thinkers in the government has been curtailed, sources close to decision-making say, including in the vital energy sector. The already small inner core of decision-makers has shrunk even further.

“We underestimated the Russian reaction,” said a Western envoy based in Moscow who spoke on condition of anonymity.

Sanctions bind Russia’s energy elite to Putin | Reuters

Why Sanctions on Russia Won´t Work Like Sanctions on Iran

“The United States, in turn, is looking to step up its own game. Policymakers are considering giving global companies a choice: stop providing long-term financing and energy assistance to major Russian companies or be kicked out of the U.S. financial system.”

With sanctions beginning to bite, Russia is starting to play a new economic game. To alleviate the pain of Western restrictions on its financial and energy sectors, Russia is turning for help to non-Western partners. Last week alone, Russia and China signed over 40 agreements that provide Russian firms with lines of credit worth billions of dollars and establish strategic partnerships in the energy sector.

The United States, in turn, is looking to step up its own game. Policymakers are considering giving global companies a choice: stop providing long-term financing and energy assistance to major Russian companies or be kicked out of the U.S. financial system. Such measures resemble the sanctions the United States placed on Iran a couple of years ago. But Iran was a different problem. And treating Russia the same way would be a mistake.

Sanctions can be an effective tool for forcing engagement and negotiation. But the pace and implementation must be tailored to the target. In the case of Iran, the United States was able to tighten the screws by pressuring foreign firms to stop dealing with the country. That move created some angry blowback, but it generally worked. And partially as a result, Tehran is at the negotiating table. When it comes to Russia, though, the political pushback that would come from blacklisting dealings with the strategic Russian energy and banking sectors would be much more severe because Russia is a more important market. Further, more companies would likely be willing to forego access to U.S. markets in order to continue working with the Russians. And that would undermine the sanctions’ effectiveness.

Eric Lorber and Elizabeth Rosenberg | Don’t Mistake Russia for Iran | Foreign Affairs

New EU Sanctions to Stop Fundraising by 3 Russian Oil Giants – WSJ

New European Union sanctions on Russia will expand the number of Russian companies unable to raise money in the bloc’s capital markets to include three major state-owned oil companies, according to documents seen by The Wall Street Journal.

Under a modest expansion of sanctions introduced in late July, the three oil companies— Gazpromneft, the oil-production and refining subsidiary of OAO Gazprom, oil transportation company Transneft, and oil giant Rosneft—will be forbidden from raising funds of longer than 30 days’ maturity.

The documents show the EU seeking to hit Russian oil companies, but leaving unscathed those involved in gas production and export, which are critical to many European countries’ energy supplies.

New EU Sanctions to Stop Fundraising by 3 Russian Oil Giants – WSJ

Will Putin cut off gas in return? What about just cutting it off during the winter?

Russia Economy In Trouble, Official Says

Not too long ago, top dogs within the Russian government said Western sanctions were not going to hurt. A couple of months later, reality has settled in.

Russia’s Economic Development Minister, Alexei Ulyukayev, said the economy had many obstacles and entered a negative growth cycle. In an op-ed published in the Vedomosti newspaper Monday, Ulyukayev wrote, “ It could be said that we have entered a negative stage of the economic cycle. Lack of demand is a significant obstacle on the way to restoring steady growth.”

Russia’s economy was slapped with sanctions from Brussels to Washington starting in March because of the country’s involvement with the ongoing civil unrest in eastern Ukraine. The sanctions began immediately after Russia annexed an important piece of Ukrainian real estate, the Crimea peninsula in the Black Sea, home to historic cities like Yalta and Russia’s Black Sea Fleet. Crimea, then an autonomous region of Ukraine, voted to secede following the toppling of the pro-Russia government in Kiev led by Viktor Yanukovych.

Russia Economy In Trouble, Official Says

Putin Picks the Worst of All Bad Choices | The Jamestown Foundation

That counter-strike against Western pressure appeared far off-target, and the Russian blogosphere exploded with jokes about Putin following the US leadership in imposing sanctions against Russia (BestToday, August 9). Yet, there were also serious reasons to expect a forceful move from Moscow in the theater of combat operations, where the rebels are in retreat across many localities, concentrating their war-bands on defending the strongholds in Donetsk and Luhansk (Polit.ru, August 6). Russia initiated two meetings of the United Nations Security Council last week, presenting the case for alleviating the “humanitarian catastrophe” in eastern Ukraine by delivering emergency aid, which would be protected by Russian “peacekeeping forces”; Moscow even began preparing a powerful convoy for the task (Newsru.com, August 9). Many member states of the North Atlantic Treaty Organization (NATO) saw in that “humanitarianism” an attempt to camouflage a military intervention, and the US issued a strong warning about the consequences of such an unacceptable escalation of hostilities (RIA Novosti, August 9).

Putin Picks the Worst of All Bad Choices | The Jamestown Foundation

BBC News – Ukraine conflict: US and EU widen sanctions on Russia

US President Barack Obama has announced new economic sanctions against Russia, saying they will make Russia’s “weak economy even weaker”.

He said the co-ordinated actions of the US and European Union would “have an even bigger bite” on Russia’s economy.

The new restrictions include banning Americans or people in the US from banking with three Russian banks.

The aim is to increase the cost to Russia of its continued support for pro-Moscow rebels in eastern Ukraine.

Moscow denies charges by the EU and US that it is supplying heavy weapons to the rebels.

BBC News – Ukraine conflict: US and EU widen sanctions on Russia

European Union unveils ‘tough’ new sanctions on Russia, including arms embargo | Mail Online

The 28-nation bloc has imposed an arms embargo, banking curbs and a ban on trade in sensitive and dual-use technologies to punish Russia for its actions in its neighbouring country.

Two diplomats told the Associated Press the measures were decided today at a meeting of EU ambassadors. A further eight Russians will also face asset freezes and travel bans.

The new EU sanctions came as John Kerry, U.S. Secretary of State, warned that Washington is also drawing up fresh sanctions against its old enemy.

‘We are in the process of preparing additional sanctions, with Europe,’ Mr Kerry told reporters, shortly after meeting with new Ukrainian Foreign Minister Pavlo Klimkin at the State Department.

But he added that Russian President Vladimir Putin ‘still has a choice going forward with respect to his ability to be able to have an impact with the separatists.’

European Union unveils ‘tough’ new sanctions on Russia, including arms embargo | Mail Online

This is getting interesting in a bad sort of way. I’m not really against this in principle, but I have a problem doing it with a gutted nuclear arsenal and downsized military. Are we directly pushing Russia toward a revolution? If we are going to do this then shouldn’t we be prepared (at least a little) if something goes wrong?

As a general principle for me, everything starts with a much bigger nuclear arsenal. Once that is established then by all means push Russia toward a revolution. And while you’re at it add China to the list. Just be careful before that bigger nuclear arsenal arrives.

It would appear that US and EU sanction pressure on Russia is pushing the world further in the direction of a great-power war. Russia just needs a good excuse. Will the Middle East provide it?

U.S. hits oil giant Rosneft, other firms with toughest Russia sanctions | Reuters

President Barack Obama imposed the biggest package of U.S. economic sanctions yet on Russia on Wednesday, hitting Russia’s largest oil producer Rosneft and other energy, financial and defense firms, with what he called significant but targeted penalties.

Obama’s latest round of sanctions came after close consultations with European leaders, who announced a less-ambitious package. The ultimate impact of the U.S. sanctions likely depends on whether the European Union follows suit.

The extent of the sanctions against key parts of the Russian energy and financial industry, including Gazprombank, was intended to serve notice to Moscow that its refusal to curb violence in eastern Ukraine has consequences.

U.S. hits oil giant Rosneft, other firms with toughest Russia sanctions | Reuters

The slow death squeeze continues. I wonder how long this can continue before Russia does something – like start a war?

Obama: New sanctions on Russia over Ukraine – CNN.com

Russia has failed to take steps to end the Ukraine conflict, President Barack Obama said Wednesday in announcing expanded sanctions targeting two banks, two energy companies, Ukraine separatists and defense companies.

European Union leaders also said they intended to increase sanctions, signaling growing Western concern over Russia’s continued support for separatists battling the Ukraine military in the country’s eastern region.

“We have to see concrete actions, and not just words that Russia in fact is committed to trying to end this conflict along the Russia-Ukraine border,” Obama told reporters at the White House.

Obama: New sanctions on Russia over Ukraine – CNN.com

Globalization in Reverse – “Get Ready for a Bumpy Ride” | TIME.com

The first age of globalization lasted from 1870 to 1914. Now there are signs that we are seeing the beginning of the end of the second age of globalization.

“Our economic landscape, like our political one, will become more volatile and less predictable. Get ready for a bumpy ride.”

With global economic integration seemingly in reverse, at least for the moment, many economists and trade experts are beginning to talk about a new era of deglobalization, during which countries turn inward. Some of the implications are worrisome. Complaints to the World Trade Organization about protectionism, intellectual-property theft and new trade barriers are rising. Trade talks themselves are no longer global but regional and local, threatening to create a destructive so-called spaghetti bowl of competing economic alliances.

Whether or not those jobs will help boost wages is something the Federal Reserve will be watching carefully. One of the hallmarks of the past 30 years of globalization was an easy-money environment. As Fed Chair Janet Yellen indicated at her latest press conference, we are coming to the end of that era. In this new economic age, not all boats will rise equally or smoothly. Markets, which had more or less converged for the past 30 years, will start diverging along national and sectoral lines. Our economic landscape, like our political one, will become more volatile and less predictable. Get ready for a bumpy ride.

Globalization in Reverse | TIME.com

Related article: 2013 May Mark the End of Our Age of Globalization

U.S. Quietly Imposes New Russia Sanctions

While the Obama administration has touted U.S. efforts to isolate Russia economically and diplomatically, it has quietly found another way to slap Moscow for its annexation of Crimea.

Nearly a month ago, with no public notice, a small office in the Commerce Department abruptly stopped approving applications from U.S. firms that want to sell Russia potentially dangerous products.

The Commerce Department’s Bureau of Industry and Security (BIS) suspended a raft of pending deals with Russia on March 1, just a day after Moscow sent troops streaming into Ukraine. The office didn’t disclose the move until this week, when it posted an oblique notice on its website. The suspension has not been previously reported.

Exclusive: U.S. Quietly Imposes New Russia Sanctions